Copilot Cowork and Work IQ: Requirements, Cost, Use Cases and Setup for Microsoft 365 Admins

Microsoft 365 Copilot has split into two distinct ideas worth understanding separately. Copilot Cowork, generally available since 16 June 2026, is the agentic execution layer: you describe an outcome and it plans the steps, drafts the email, builds the deck, schedules the meeting and asks your permission before anything leaves the tenant. Work IQ is the intelligence layer underneath — the data, memory and inference platform that grounds Copilot and any agent you build in your organisation's real context, exposed to developers through A2A, MCP and REST APIs. One is a product your users see; the other is the plumbing your agents run on. This guide covers what each does, what they require, what they cost, and how to switch them on.

What is Copilot Cowork?

Cowork is an execution agent built into Microsoft 365 Copilot. Where Copilot Chat answers questions and drafts content in place, Cowork carries out tasks across Outlook, Teams, Word, Excel, PowerPoint, OneDrive, SharePoint and your calendar. You describe what you need in natural language (up to 250,000 characters, with file attachments), and Cowork breaks the request into steps, loads the specialised skills it needs, and works through them visibly in the conversation. Before any consequential action — sending an email, posting to Teams, creating a meeting — it pauses and asks for approval, with a risk-level indicator on medium- and high-risk actions.

Out of the box Cowork ships with skills for Word, Excel, PowerPoint, PDF, Email, Scheduling, Calendar Management, Meetings, Daily Briefing, Enterprise Search, Communications, Deep Research and Adaptive Cards. You can add up to 50 custom skills per user, install plugins from the Microsoft 365 App Store, and schedule prompts to run automatically on a recurring basis. A model picker lets users choose the model for a task or let Cowork decide — notably, Cowork uses Anthropic models as a Microsoft subprocessor alongside Microsoft's own.

Cowork runs in the browser at m365.cloud.microsoft, inside Outlook and Teams, in the Microsoft 365 Copilot desktop app for Windows and Mac, and in the mobile app for iOS and Android.

What is Work IQ?

Work IQ is the workplace-intelligence layer that grounds Microsoft 365 Copilot — and your own agents — in real-time organisational context. It is built on three layers: Data (unified signals from files, email, meetings, chats and business systems), Memory (persistent understanding of how people and teams work, so agents stay consistent across sessions), and Inference (models, skills and tools that let agents reason and act under governance).

For admins and developers, the interesting part is the Work IQ API surface: an A2A endpoint for agent-to-agent collaboration, a REST API for web applications, and a remote MCP server that collapses hundreds of Microsoft 365 operations into ten generic tools (fetch, create, update and similar verbs) across mail, calendar, files, people, chat and sites. Agents discover how data is structured at runtime rather than relying on prebuilt connectors. Long-running workflows get persistent SharePoint Embedded workspaces inside your tenant boundary.

Governance is central to the design: authentication is Entra ID delegated only — every request runs as the signed-in user, application-only auth is not supported — so Microsoft 365 permissions, sensitivity labels and compliance policies are enforced automatically. A Rego-based policy engine evaluates every tool invocation, and all calls are logged for audit, analytics and rate limiting.

Requirements

Cost: how Copilot Credit billing works

The Microsoft 365 Copilot license (list price US$30 per user per month) is the entry ticket, but Cowork itself is metered. Every task consumes Copilot Credits — Microsoft's common currency for usage-billed AI services — priced at US$0.01 per credit on pay-as-you-go. The credit cost of a task is calculated from four inputs: the model used, how much organisational context is retrieved, how many tool calls are made, and how long the task runs. A quick inbox triage costs far less than a deep-research report that produces three documents.

Two payment models are available: pay-as-you-go billed to a connected Azure subscription, or prepaid Copilot Credit packs for organisations that can commit to volume. Work IQ API usage is billed through the same Copilot Credit mechanism — included for Copilot-licensed users inside Microsoft's own Copilot experiences, usage-billed when consumed by custom or third-party agents, and usage-billed entirely for unlicensed users.

Budget control lives in the Microsoft 365 admin center's Cost Management dashboard: spending policies scoped to users or groups, budgets, alerts, hard caps, and per-user/per-agent consumption reporting. Microsoft also publishes a Cowork estimator (aka.ms/CustomerCoworkEstimator) to model credit consumption before you commit. The practical advice: start with pay-as-you-go plus a conservative hard cap, watch the Consumption tab for two or three billing cycles, then decide whether prepaid packs make sense.

Use cases that actually matter for IT teams

• Daily briefing on a schedule — a scheduled prompt that summarises overnight tickets, calendar conflicts and unread escalations before you sit down.
• Inbox management — triage a shared or personal mailbox: sort into folders, draft inline replies, flag what needs a human.
• Meeting preparation and follow-up — pre-meeting intelligence pulled from related files and threads; post-meeting recap emails sent to the team after your approval.
• Recurring reporting — a scheduled task that assembles a weekly status deck or service report from SharePoint sources and posts it to a Teams channel.
• Deep research — multi-source synthesis (tenant content plus web) into a structured report, e.g. comparing vendor options or summarising a licensing change.
• Document production at volume — turning runbooks, audit evidence lists or policy drafts into formatted Word/PDF deliverables from rough notes.
• File hygiene — reorganising OneDrive/SharePoint folders and creating structure, which is tedious by hand and low-risk to delegate.
• Custom agents on Work IQ — building Copilot Studio or pro-code agents that use the Work IQ MCP tools to read mail, files and chat as the signed-in user, with labels and permissions enforced for free — instead of hand-rolling Graph API integrations.

Setup: admin instructions

Five steps take a tenant from nothing to governed Cowork access:

• 1. Assign licenses. Ensure target users hold a Microsoft 365 Copilot license on a qualifying base plan, with their primary mailbox in Exchange Online.
• 2. Enable usage-based billing. Sign in to the Microsoft 365 admin center as a Global Admin or Billing Admin, go to Copilot > Cost Management, and select Get started. Choose pay-as-you-go (connect an Azure subscription) or purchase prepaid Copilot Credits.
• 3. Set spending policies. Define who can consume credits, per-user or per-group limits, budgets, alerts and hard caps. AI Admins and License Admins can manage policies once billing exists.
• 4. Review Cowork settings. Under Copilot > Settings > Cowork, decide whether Cowork may use the Edge browser to perform tasks on users' behalf, and review model availability — including whether Anthropic models are permitted in your tenant.
• 5. Monitor. Use the Cost Management Overview tab for spend-versus-capacity at a glance and the Consumption tab to drill into usage by user, group, service or agent. Treat the first month as a baselining exercise before tightening policies.

Governance note: Cowork acts as the user — it can only see and touch what the signed-in user can. That makes your existing permission hygiene the real control surface. Oversharing in SharePoint that was merely embarrassing in search becomes actionable by an agent, so run a permissions and sensitivity-label review before broad rollout.

Setup: user instructions

• 1. Open Cowork. Go to m365.cloud.microsoft (or the Copilot desktop/mobile app) and select the Cowork toggle next to Chat.
• 2. Describe the task. Type what you want done, or pick a suggested prompt such as Catch me up or Organize my inbox. Be specific — outcome, audience, format. Attach files from your device, OneDrive, SharePoint or Teams, or add work context (files, people, meetings).
• 3. Watch it work. Cowork shows each skill it loads and each step it takes. Interrupt at any time to steer, pause or cancel.
• 4. Approve actions. Before sending, posting or scheduling anything, Cowork shows a preview with an action-labelled button (Send, Post, Create). Approve once, or use the dropdown to allow similar actions for the rest of the conversation.
• 5. Review results. Created files appear in the side panel — preview in the browser, download individually or as a zip, or open in OneDrive. Use the Scheduled tab to manage recurring prompts and the task views to resume past work.

Cowork vs Copilot Chat vs agents: which is which?

A useful mental model: Copilot Chat is conversational — ask, get an answer, copy it out. Agents are scoped specialists you or Microsoft build for a defined job. Cowork is the general-purpose executor that plans multi-step work across apps and takes real actions under approval. Work IQ is not a user product at all — it is the shared context and tooling layer all of the above stand on, and the API you target when you want your own agents to be as grounded as Microsoft's. Licensing follows the same split: Chat is covered by the Copilot seat, Cowork and Work IQ API calls are metered on top.

Frequently asked questions

What is Microsoft Copilot Cowork?

Copilot Cowork is the agentic capability in Microsoft 365 Copilot, generally available since 16 June 2026. You describe a task in natural language and Cowork plans and executes it across Outlook, Teams, Word, Excel, PowerPoint, OneDrive and SharePoint — sending emails, creating documents, scheduling meetings and running scheduled prompts — asking for your approval before each consequential action.

What licenses does Copilot Cowork require?

An active Microsoft 365 Copilot user license (on a qualifying Microsoft 365 base plan) with the user's primary mailbox in Exchange Online. In addition, the tenant must have usage-based billing configured, because Cowork task execution is metered in Copilot Credits on top of the license.

How much does Copilot Cowork cost?

Beyond the Microsoft 365 Copilot license (list US$30 per user per month), Cowork bills per task in Copilot Credits at US$0.01 per credit on pay-as-you-go. Task cost depends on the model used, context retrieved, tool calls made and runtime, so simple tasks cost pennies-to-dollars while heavy multi-document tasks cost more. Admins can set budgets, alerts and hard caps in the Microsoft 365 admin center, and prepaid credit packs are available as an alternative to pay-as-you-go.

What is Microsoft Work IQ?

Work IQ is the intelligence layer that grounds Microsoft 365 Copilot and custom agents in organisational context. It combines a data layer (signals across files, mail, meetings and chats), a memory layer (persistent understanding of how people work), and an inference layer (models, skills and tools). Developers reach it through A2A, REST and a remote MCP server that exposes Microsoft 365 data and actions as ten generic tools.

Does Work IQ require a Microsoft 365 Copilot license?

Work IQ API access is independent of Copilot licensing and billed on usage via Copilot Credits. Copilot-licensed users already get Work IQ inside Microsoft's Copilot experiences; custom and third-party agents consuming the APIs are usage-billed. One current exception: adding Work IQ MCP servers to a Copilot Studio agent requires a Microsoft 365 Copilot license while in preview.

Can Cowork take actions without my approval?

No. Cowork pauses before consequential actions — sending email, posting in Teams, scheduling meetings — and shows a preview with a risk-level indicator. You approve, cancel, or opt to allow similar actions for the remainder of that conversation. You can also pause, resume or cancel a task at any point, and Cowork only ever operates with the signed-in user's own permissions.

How do admins enable Copilot Cowork?

In the Microsoft 365 admin center: assign Microsoft 365 Copilot licenses, then go to Copilot > Cost Management and set up usage-based billing (connect an Azure subscription for pay-as-you-go or buy prepaid Copilot Credits), define spending policies and caps, and review Copilot > Settings > Cowork for browser-access and model controls, including whether Anthropic models are enabled in the tenant.